The Australian Competition and Consumer Commission (ACCC) had conceded defeat in the $215-million Metcash purchase of Franklins Supermarkets. After a prolonged legal battle, a Federal Court judge ruled last week in favour of Metcash despite opposition by the competition regulator.

"The ACCC has carefully reviewed the Full Federal Court's decision in the Metcash matter and decided that it will not seek special leave to appeal to the High Court," ACCC Chairman Rod Sims said in a statement.

"The ACCC agrees that in relation to any acquisition, it must consider the likely effect on competition, based on commercially relevant facts, assessments and evidence and not speculative possibilities," he added.

The regulator said it would follow the advice of the court to use counterfactual analysis or a comparison of the likely future state of competition with and without the acquisition when it assesses effect of competition on a buy-in, instead of an economic theory which ACCC used in the Metcash purchase.

Fiona Crosbie, a partner at law firm Allen Athur Robinson, pointed out that the ACCC had previously used the counterfactual approach, except in the case of Metcash. Although members of the court appeared to question the intellectual consistency of merger analysis because it involves two different standards of proof, Ms Crosbie pointed out that ACCC's decision not to contest the court decision would result in the analysis surviving an appeal to the High Court not being settled.

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